Driver's Dilemma

I bought my first car from my dad.
Driving is essential. In today's hectic society, it is almost a requirement that you get your license as soon as you reach legal age.

Unfortunately, driving is also expensive. Buying the car, insurance, gas, and standard maintenance all make the costs of driving add up quickly.

But driving doesn't have to break your bank; with a few simple tricks you can keep both the ID and money pockets of your wallet happy.

Your first car — new or used?

So you've just gotten your license. Now what are you going to drive?

Buying a car will probably be the largest single cost of driving, and you want to make this decision wisely. An important piece of advice is to buy used—although this is usually a no-brainer for teenagers.

New cars may smell nice, but they depreciate in value by about 10% the minute you drive off the lot. New cars also typically have a higher cost than used. If it's your first car you probably won't be driving it for the rest of your life and so you won’t have time to recoup that extra cost.

Get the perfect used car

Learn how to negotiate for price.

Now let's say that you've looked at a few used cars. There's a delicate balance with used cars—while one car may be cheaper upfront, it may be more expensive in the long run.

For example, a totally beat-up junker with 150,000 miles on it may cost less than a well-maintained car with 75,000 miles, but the well-maintained car will last longer and have fewer maintenance costs.

Talk to family and friends. Most people would prefer to sell an old car to someone they know personally rather than to a stranger who saw it in the classified ads. Also, family members are usually much more willing to sell their cars at a discount if they know it's helping out their kin.

Both my dad and I bought cars from family members. My dad bought my aunt's old car, and I bought his car from him. In both cases, we paid much less than we would have for similar cars elsewhere.

First car means first insurance premium

Once you have a car, you need auto insurance. Insurance can be expensive, especially for inexperienced drivers.

Most teenagers stay on their parents' insurance plan, but it may be cheaper to get insured elsewhere. Shop around and try to find the lowest rates among the competition, even if that means using a different company than your parents. Don't forget to take into account the many discounts most companies offer.

Good grades could help you get a lower insurance rate.

Most states require student drivers who have not reached the age of 18 to take some kind of drivers' education classes. Even if your state doesn't require drivers’ ed, taking those classes can pay off big time when it comes to insurance. Many insurance companies also offer lower rates for good grades, so make sure you keep up with your school work, too!

Then, to keep your rates low, be sure to drive safely and keep a clean record. This is pretty much common sense, really—after all, who wants an accident or a ticket anyway?

Gas may be the most obvious cost associated with driving...

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